The Impact Of China 's Productive Service Industry On The Internationalization Of Manufacturing Industry And Its Mechanism

With the development of economy and the international status, the international competitiveness of manufacturing sector of China experienced continuous improving. However, compared with the rapid development of manufacturing sector, China’s producer service present less development in specialization and innovation capacity compared with developed and emerging countries. This paper tries to analyze the interrelationship between manufacturing sector and producer service industry.The paper adopts the theory of industry specialization and value chain analysis perspective. And the middle demand from producer service industry as input of manufacturing sector is outlined based on the theoretical demonstration and international comparison.Secondly, the historical review on manufacturing with high export-oriented is presented. And FDI performance of producer service industry is then given in order to describe the linkage between the performance of producer service supply and China’s export-oriented manufacturing value chain. In terms of the dominance of export via OEM model, manufacturing of labor-intensive product present the restriction to "intermediate demand", which is supposed to stimulate marketing and specialization of producer services sector.Thirdly, internationalization of Manufacturing in China is driven by foreign capital and trade, considering the special open mode and appearance of China, great foreign control worked in China’s manufacturing industry, leading that great producer service demand from the manufacturing is satisfied by the headquarters of the multi-national corporation and reducing demand to China’s domestic producer service. In addition, innovation ability is lack in China, which lead inadequate market development in producer service and technology depend greatly on import.Due to the relationship between the industry and the factors associated with demand, producer services have an impact on the manufacturing of both the development and process of internationalization. The primary stage of internationalization of manufacturing of China is to take the processing trade as the main development mode and China’s manufacturing take part in the global value chain with fragment production of low-tech, which take negative influence China’s producer service. The second stage is specialization between different value chain fragment, the difference showed as different function between the eastern cities and central and western cities, the former gradually formed the development of service in the value chain (belonging to the Multi-National Corporation headquarters services in the first stage) and the latter is the specialization of production.Combined with the global value chain perspective, this paper analyze the relationship between producer service and industry and manufacturing industry, from the elements embedding and industrial division of labor theory to explain the impact cause of producer service industry to the internationalization of manufacturing industry. And disintegrate the industry chain via the intermediate demand analysis, combined R&D service case and chip service case in Taiwan to explain the influence of producer service to manufacturing industry. The effect analysis and empirical test also support the view of this paper. This paper tries to analyze from the perspective of manufacturing industries’ intermediate demand for producer service and export-oriented characteristic of China’s manufacturing. Unlike developed countries, the manufacturing’s technology upgrading and innovation demand in China simultaneously developed with the evolution of export-oriented economic development strategy which is highly dependent on the international market. The fragment of the value chain in the export of labor-intensive industries lead to weak demand for producer service, and under the suppression of system and market and the market alternative of foreign investment, capital-intensive manufacturing’s demand for producer service is also weakened. Fundamentally, China’s export-oriented economic development model, position of the world factory and processing trade-based trade model have great impact on manufacturing’s intermediate demand for producer service to some degree and there for bring influence on the upgrading of domestic industry structure and the internationalization of manufacturing. Six parts included in this paper, literature review give us an overview of the previous studies in producer service, internationalization of manufacturing and also the relationship between them. The effect analysis and empirical test has been done to explain the situation and suggestions to the industry upgrading and competiveness improvement are also put forward.